Correlation Between Sri Lanka and Union Chemicals
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By analyzing existing cross correlation between Sri Lanka Telecom and Union Chemicals Lanka, you can compare the effects of market volatilities on Sri Lanka and Union Chemicals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sri Lanka with a short position of Union Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Lanka and Union Chemicals.
Diversification Opportunities for Sri Lanka and Union Chemicals
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sri and Union is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sri Lanka Telecom and Union Chemicals Lanka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Chemicals Lanka and Sri Lanka is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sri Lanka Telecom are associated (or correlated) with Union Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Chemicals Lanka has no effect on the direction of Sri Lanka i.e., Sri Lanka and Union Chemicals go up and down completely randomly.
Pair Corralation between Sri Lanka and Union Chemicals
Assuming the 90 days trading horizon Sri Lanka Telecom is expected to under-perform the Union Chemicals. In addition to that, Sri Lanka is 1.76 times more volatile than Union Chemicals Lanka. It trades about -0.16 of its total potential returns per unit of risk. Union Chemicals Lanka is currently generating about -0.16 per unit of volatility. If you would invest 70,000 in Union Chemicals Lanka on August 30, 2024 and sell it today you would lose (1,000.00) from holding Union Chemicals Lanka or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Sri Lanka Telecom vs. Union Chemicals Lanka
Performance |
| Timeline |
| Sri Lanka Telecom |
| Union Chemicals Lanka |
Sri Lanka and Union Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Lanka and Union Chemicals
The main advantage of trading using opposite Sri Lanka and Union Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Lanka position performs unexpectedly, Union Chemicals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Union Chemicals will offset losses from the drop in Union Chemicals' long position.| Sri Lanka vs. EX PACK RUGATED CARTONS | Sri Lanka vs. PANASIAN POWER PLC | Sri Lanka vs. Distilleries Company of | Sri Lanka vs. Palm Garden Hotels |
| Union Chemicals vs. EX PACK RUGATED CARTONS | Union Chemicals vs. PANASIAN POWER PLC | Union Chemicals vs. Distilleries Company of | Union Chemicals vs. Palm Garden Hotels |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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